Furucombo

Furucombo (COMBO) is a multi-chain DeFi aggregator designed to simplify, optimize, and automate DeFi trading for its users.

It is a drag-and-drop tool that allows users to build and customize different DeFi (Decentralized Finance) combinations (‘combos’ or ‘cubes’). These combos/cubes represent multiple protocol actions bundled into one transaction executed by Furucombo.^[1]^[2]

Overview

Furucombo visualizes complex DeFi (Decentralized Finance) protocols into cubes. Users set up inputs/outputs and the order of the cubes, then Furucombo bundles all the cubes into one transaction and sends them out.^[3]^[4]

It is just like building a DeFi lego into one transaction without the need to know to code.

Furucombo is a great tool for people who want to perform actions across different protocols, especially those who want to leverage flash loans. Flash Loans are introduced by Aave ($AAVE), an open-source lending protocol for anyone to deposit and borrow cryptographic assets. ^[5]

On Furucombo, they make use of a proxy contract and handler contracts to execute their transactions across different DeFi protocols. Once the transaction is executed successfully, the proxy contract sends all the funds back to their wallet. That being said, Furucombo does not hold any funds. ^[6]

Their proxy contract is verified, where users can see the contract source code. But the rest of Furucombo is not open-sourced yet. ^[7]

Furucombo went live in March 2020 and has raised $1.85 million in a seed funding round from leading DeFi Venture Capitalists. ^[8]

Synthetix Cubes

Synthetix provides weekly SNX rewards to several staking pools, including the incentives for the Curve sUSD andsEUR liquidity providers. With the phased rollout of the Synthetix integration, users can now stake their Curve LP tokens to Synthetix, and claim the rewards on Furucombo directly. ^[9]

This integration represents a major step for building yield farming cubes on Furucombo. Previously Furucombo couldn’t support most staking activities because the farming protocols would see only one staker, the Furucombo proxy contract, instead of the many individual stakers using Furucombo. ^[10]

They have tackled the challenge with our Synthetix adaptor, and the related smart contracts have been audited by Haechi with zero critical issues found.

The Synthetix staking cube will lead them to stake through Furucombo’s adapter contract. If they want to unstake, claim, or see rewards after the operation, they must use Furucombo as well.

Their next plan will focus on the integration with Synthetix v3 to bring derivatives to composability.

If a user uses Furucombo's Synthetix Stake Token cube, it will lead them to stake through Furucombo’s adapter contract. Hence, if they want to unstake, claim, or see rewards after the operation, they must use Furucombo as well.

Flashloan Combo on Furucombo

Flash Loans are introduced by the Aave, an open-source lending protocol for anyone to deposit and borrow cryptographic assets. Essentially, flash loans let users borrow any amount up to the total liquidity available without any collateral, so long as the loan is repaid in the same transaction. If the loan is not repaid, the whole transaction will be reverted.

With a flash loan, anyone can access a massive amount of liquidity, and use the loan with other protocols however they want. They can become a ‘whale’ without any capital. There are currently three pools providing flash loans:

Aave: 17 tokens available with a 0.09% fee
dYdX: 3 tokens available zero fee
Uniswap V2: 100+ tokens available with 0.3% fee^[12]

The use cases are summarized into:

Arbitrage trades
Collateral swap
Self-hedging
Self-liquidation
(Debt) Interest rate swap
(Debt) Currency swap

The most popular use case by far is Arbitrage trades. For those unfamiliar, arbitrage is the strategy of making a profit from price differences between different markets. To make a significant amount of profit, users will need substantial capital to get started. Flashloan to generate free money with no upfront cost.

Note:

For arbitrage traders, Furucombo lowers the barriers to entry for building money legos, providing all the necessary elements to create arbitrage strategies including the so far coder-only flash loans. Furucombo does NOT find arbitrage opportunities for them.

On Furucombo, there are two pools supported, Uniswap (V1) and KyberSwap.

Step by step to Create Flashloan Combo on Furucombo

Go to Furucombo
Add a Uniswap cube
Add a Kyberswap cube
Add Flashloan cube
Drag Flashloan’s 1st cube to the top
Connect wallet
Send out

Utility Cubes

What is Send Token?

Send Token cube lets a user send tokens to their designated address. Some use cases can be:

Send tokens to multiple addresses
Send multiple tokens to one address
Move all your dust tokens to another wallet

WETH

When a user "wraps" ETH, it isn't wrapping so much as trading via a smart contract for an equal token called WETH. If a user wants to get plain ETH back they need to "unwrap" it, that is, trade it back for plain ETH.

Add Funds

Add Funds cube is used when a user needs to send ETH or tokens to Furucombo during the execution of a combo.

For example, when a user wants to claim your CRV and sell them to DAI, you must use "Add Funds" to complete the combo. This is because when he/she can claim CRV, the claimed CRV tokens go straight to their wallet but not Furucombo. In order to continue sending those CRV to Uniswap, the user needs to send the CRV to Furucombo first.^[13]

Return Funds

Return Funds cube is used when a user wants to send ETH or tokens back to their wallet during the execution of the combo. Although Furucombo sends all the funds back to users upon completing the execution of the combo, in some cases, Return Funds must be added to successfully execute the combo.

For example (see below image), you want to swap your collaterals on Compound, say cDAI to cETH. When someone borrows ETH from a flash loan and supplies the ETH to Compound, the cETH they see in the second cube is sent to Furucombo's proxy. Their cDAI is locked until they have enough cETH supporting their debt, so here they will need a "Return Funds" cube which transfers cETH from Furucombo's proxy to their wallet. And in the next cube, they move their cDAI to Furucombo's proxy by the "Add Funds" cube.^[15]

Gas Saver

Gas Saver cube is used when they have some CHI or GST2 tokens in their wallet. When a user burns them (esp at a high gas price), they get a refund to make the gas cost much cheaper to execute than the same transaction that doesn't use GasToken.

Arbitrage

Crypto arbitrage is similar to fiat or sports arbitrage in quite a few ways. The main idea is to try to benefit from price differences for the same asset on different markets or exchanges. Arbitrage is the simultaneous purchase and sale of an asset to profit from an imbalance in the price. It is a trade that profits by exploiting the price differences of identical or similar financial instruments on different markets or in different forms.

In other words, it simply means buy low and sell high.

Making a profitable combo

First and foremost, they need to find an arbitrage opportunity.
Taking gas costs into consideration, arbitrage combos cost more than average combos due to the complexity of the actions. This is a primary cost factor influencing the profitability of the trade.
Remember there are many bots front-running trades at all times. So there's a chance that your combo may be front-ran by bots.
Arbitrage combos have a higher chance of failure as the combo setup usually has a high dependency on each cube's outputs. That being said, once the opportunity vanishes, their combo fails and they lose the gas fee they just paid.^[14]